• Revenue: $1,155 million for the full year 2024, with organic growth of 5.2%.
• Adjusted EBITDA Margin: Nearly 34% for 2024.
• Non-GAAP Diluted EPS: $4.07 for 2024.
• Rule of 40 Score: Approximately 39% for 2024.
• Social Sector Revenue Growth: 7% increase in 2024.
• Social Contractual Recurring Revenue Growth: 8% increase in 2024.
• Social Transactional Recurring Revenue Growth: 6% increase in 2024.
• Gross Dollar Retention: Approximately 92%, excluding EVERFI.
• Adjusted Free Cash Flow: Approximately $245 million, or 21% of revenue, up from 19% in 2023.
• Stock Repurchase: 10% of common stock bought back in 2024, rising to 11% including net share settlement on employee stock comp.
• 2025 Revenue Guidance: Projected range of $1,115 million to $1,125 million, representing organic growth of 4.2% to 5.1% as reported.
• 2025 EBITDA Margin Guidance: Approximately 34.9% to 35.9%.
• 2025 Non-GAAP EPS Guidance: $4.16 to $4.35, up 2% to 7% year-over-year.
• 2025 Adjusted Free Cash Flow Guidance: $185 million to $195 million.

• Warning! GuruFocus has detected 7 Warning Signs with BLKB.

Release Date: February 18, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Blackbaud Inc (NASDAQ:BLKB) successfully divested EVERFI, which was dilutive to revenue growth and profitability, allowing the company to focus on its core business.
• The company achieved significant improvement in new logo wins and deepened relationships with existing customers, particularly in the K-12 education vertical.
• Blackbaud Inc (NASDAQ:BLKB) reported strong financial results for 2024, with revenue of $1,155 million and an adjusted EBITDA margin of nearly 34%.
• The company's adjusted free cash flow remained robust at approximately $245 million, representing 21% of revenue, up from 19% in 2023.
• Blackbaud Inc (NASDAQ:BLKB) is leveraging AI to enhance customer workflows and efficiency, with over 5,000 customers adopting machine learning features in its products.

Negative Points

• The divestiture of EVERFI resulted in a one-time cash release payment of $28 million, impacting the company's financials.
• Blackbaud Inc (NASDAQ:BLKB) anticipates a decline in adjusted free cash flow for 2025, with guidance set at $185 million to $195 million, down from $245 million in 2024.
• The company expects a negative impact of $2 million to $3 million on revenue and adjusted EBITDA due to currency fluctuations in 2025.
• Interest expenses are projected to increase significantly due to stock repurchases, with an expected $11 million incremental impact year-over-year.
• Blackbaud Inc (NASDAQ:BLKB) is not incorporating any anticipated viral giving in its 2025 guidance, which could affect revenue projections.

Q & A Highlights

Q: Can you elaborate on the shift in focus from migrations to net new logos and the potential market opportunity beyond your current customer base? A: Michael Gianoni, President and CEO, explained that Blackbaud has shifted its focus to acquiring new logos as migrations to new cloud solutions are largely complete. The company saw significant growth in new logo production in the latter half of 2024 and expects bookings to increase in 2025. Blackbaud is targeting various sectors, including K-12, arts and cultural, and non-profit, with a continued emphasis on cross-selling within its existing customer base.

Q: How does the 2025 guidance account for viral giving, and have there been any notable events impacting this? A: Anthony Boor, CFO, noted that the 2025 guidance does not assume any viral giving, which can be volatile. In 2023, viral giving was exceptionally high, creating a tough comparison for 2024. The company saw minimal viral events in 2024, with some impact from California wildfires, but it was less than $1 million.

Q: What impact do changes in federal dollar allocation have on your customers, and how is this reflected in your guidance? A: Michael Gianoni stated that while some customers might be affected by changes in federal funding, Blackbaud's platforms primarily drive donations through individual donors, not federal funding. The company has not seen significant impacts yet and continues to focus on helping customers increase revenue through donations.

Q: Can you clarify the factors affecting the 2025 free cash flow guidance, which appears weaker than expected? A: Anthony Boor explained that the free cash flow guidance reflects several factors, including a $28 million lease buyout related to EVERFI, a $5 million investment in a new India location, and increased interest expenses due to stock repurchases. These factors, along with working capital changes and divestiture-related costs, contribute to the lower guidance.

Q: How does Blackbaud plan to achieve its Rule of 45 target by 2030, particularly regarding cost savings and bottom-line improvements? A: Michael Gianoni highlighted a mix of strategies, including closing remaining data centers, achieving more scale, and leveraging labor arbitrage with the India initiative. The company also focuses on AI-driven productivity improvements and expects mid-single-digit revenue growth to contribute to achieving the Rule of 45 target.

Q: How is Blackbaud leveraging its data for AI development, and what impact does this have on growth opportunities? A: Michael Gianoni discussed Blackbaud's extensive use of AI and machine learning, with embedded AI in products like Raiser's Edge NXT. The company is developing advanced AI capabilities, such as Blackbaud co-pilot, to enhance customer interaction with data. These innovations are expected to drive revenue and may lead to new monetization opportunities in the future.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.